Fitch lowers Japan's sovereign rating
Source: Agencies |
May 23, 2012, Wednesday
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Print Edition
Print Edition
FITCH cut Japan's sovereign credit status yesterday to the lowest level among global ratings agencies as a political stalemate dims the chance that the country can curb its snowballing debt.
Fitch Ratings cut Japan's long-term foreign currency rating by two levels from AA to A plus, the fifth-highest investment grade. It cut the more important local currency rating by one notch from AA minus to A plus. Both were given a negative outlook.
Fitch warned further downgrades were possible unless the government takes new fiscal policy measures to stabilize public finances and its ratio of debt to gross domestic product.
"The downgrades and negative outlooks reflect growing risks for Japan's sovereign credit profile as a result of high and rising public debt ratios," Andrew Colquhoun, head of Asia-Pacific sovereigns at Fitch, said in a statement.
"The country's fiscal consolidation plan looks leisurely, relative even to other fiscally challenged high-income countries, and implementation is subject to political risk."
The downgrade could serve as a chilling reminder to highly indebted countries in Europe that urgent action is needed to trim public debt and prevent concerns about sovereign debt from weighing further on the global economy.
Several eurozone countries have been hit with multiple downgrades as the region struggles to deal with its mounting debt crisis.
The United States may reach a US$16.4 trillion government debt ceiling after November presidential elections.
Fitch Ratings cut Japan's long-term foreign currency rating by two levels from AA to A plus, the fifth-highest investment grade. It cut the more important local currency rating by one notch from AA minus to A plus. Both were given a negative outlook.
Fitch warned further downgrades were possible unless the government takes new fiscal policy measures to stabilize public finances and its ratio of debt to gross domestic product.
"The downgrades and negative outlooks reflect growing risks for Japan's sovereign credit profile as a result of high and rising public debt ratios," Andrew Colquhoun, head of Asia-Pacific sovereigns at Fitch, said in a statement.
"The country's fiscal consolidation plan looks leisurely, relative even to other fiscally challenged high-income countries, and implementation is subject to political risk."
The downgrade could serve as a chilling reminder to highly indebted countries in Europe that urgent action is needed to trim public debt and prevent concerns about sovereign debt from weighing further on the global economy.
Several eurozone countries have been hit with multiple downgrades as the region struggles to deal with its mounting debt crisis.
The United States may reach a US$16.4 trillion government debt ceiling after November presidential elections.
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